Toll Price Elasticity for the Addis Adama Expressway
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Date
2024-10
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Addis Ababa University
Abstract
This research investigates the toll price elasticity of demand for the Addis Adama Expressway. The study aims to quantify how changes in toll prices affect traffic volume across various vehicle categories. Through econometric analysis using historical data from July 2019 to June 2023, the research incorporates key factors such as toll prices, fuel prices, GDP per capita, and external influences like security concerns and overburden restrictions.
The findings show that toll price elasticity varies across vehicle categories, with short-term elasticities ranging from -0.25 to -0.51, indicating a negative but inelastic response to toll price increases. Over the long term, toll price elasticity becomes more pronounced, suggesting that drivers adjust their behavior over time in response to price changes. Fuel price elasticity was found to be unexpectedly positive, reflecting the cost-saving advantages of using the expressway compared to non-tolled roads.
The research highlights the importance of integrating toll price elasticity into pricing strategies to optimize revenue while maintaining traffic levels. The results provide valuable insights for policymakers, supporting data-driven decisions on toll pricing and infrastructure development for the Ethiopian Expressway Network.
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Keywords
toll roads, expressway network, econometrics, elasticity